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AIB mortgage holders who were wrongly denied a tracker deal when their fixed rate ended are celebrating the arrival of their long-awaited compensation cheques.

Customers were made to wait six months for the cheques but are now receiving a double windfall after the bank agreed to drop their monthly mortgage payment as recompense.

Finance consumer expert Brendan Burgess, of the website askaboutmoney.com, said yesterday: ‘They are being sent out in batches and the first ones arrived this morning.

‘There are about 5,600 people in the group, most of whom will be getting a life changing amount of money that they knew nothing at all about.

‘They will already have had the balance on their mortgage reduced by about 20% – some 12% of the balance when their fixed rate finished about ten years ago – and consequently their repayments will be reduced by about 20%.’

Mr Burgess put the six-monthsplus delay between the original announcement and the cash payout being issued down to ‘red tape and incompetence’.

He added: ‘There will be people today who opened their post and a cheque for €15,000 will fall out and AIB will be saying, “We also wrote down your mortgage by €30,000”. ‘In most cases the mortgages went down in July. If you’re one of a group of people saying, “Can I afford my mortgage this month?”, and you suddenly see that it’s come down from €1,000 to €800, that’s great. Another €200 to spend.

‘And then you open the post and there’s a cheque for €15,000. If I got a cheque for €15,000 tomorrow I’d be thrilled.’

Mr Burgess said there are ‘a lot of people out there who are in deep trouble’, adding: ‘Their car has broken down and they can’t afford to replace it, and the next thing they get a cheque for €15,000. Many have said with that writedown they are in positive equity so they can trade up. So this will have had a huge impact.

‘There are 6,000 people who’ll be delighted but for 1,000 it may be life-changing. That is an overused word but they could have been in danger of losing their home and can now afford to trade up.’

A spokesman for AIB said yesterday: ‘As communicated in April, following administrative work by the bank, customers in this grouping will receive payment in August.’

AIB, which is about 70% Stateowned after an eye-watering €20.7billion taxpayer-funded bailout, also agreed that anyone in this group who is on a fixed rate can break out without paying a penalty fee. As fixed rates have been falling, it’s very likely that most people could switch to a lower rate by breaking now.

Mr Burgess added: ‘AIB has calculated the interest refund on the write-down using simple interest. We are challenging this directly with AIB as we can’t see any justification for using compound interest when charging people and using simple interest when refunding people.’

As well as the 5,600 cases, 300 other customers whose fixed rate ended in late 2008 or early 2009 will be receiving a much more generous redress package, including automatic compensation of 15% of the overcharged interest and a tracker for the remaining term of the loan.

‘This will have had a huge impact’